The FCA has recently published two thematic reviews regarding bribery and corruption in commercial insurance broking and anti-money laundering risks faced by small banks. Both thematic reviews are updates on previous reviews conducted by the FCA's predecessor, the FSA, published in 2010 and 2011.
While these reviews are specific to certain sectors, both are relevant for all organisations regulated by the FCA, and the FCA will expect firms to be aware of the issues identified. We look at each thematic review in turn, drawing on some of the emerging themes, and highlight areas of "good practice".
Managing bribery and corruption risk in commercial insurance broking
Firms regulated by the FCA are required to have in place systems and controls to manage bribery and corruption risk ("ABC"). This is distinct from the requirements under the Bribery Act 2010, which the FCA is not responsible for upholding and therefore this review did not analyse firms' compliance with the Act.
The FCA's review found that most of the firms in its sample were not adequately managing bribery risks and that a number of firms had not paid heed to the FSA's warnings in its previous review.
The FCA identified three key messages that firms are encouraged to comply with going forward:
business-wide risk assessment - identifying bribery risks across the trading and non-trading aspects of business and assessing risks with all parties in the chain; individual relationship risk assessments - the FCA expects firms to assess risk on a business wide level, rather than just assessing risk on a jurisdictional level; firms are advised to assess risks such as the sector, levels of commission payments, class of business involved and whether there is any political risk; and governance and management information - ensuring that senior management have oversight of risk management. The main theme is therefore ensuring that holistic risk assessments are conducted both at a business wide level but also at a more granular relationship level and conducting risk assessments that assess a number of different relevant factors. Once such assessments are done, the results should be provided to management and any issues raised as necessary.
The FCA has provided a number of recommendations for "good practice" including the following:
appointing an Anti-Corruption Officer or otherwise appointing a senior manager with responsibility for ABC ensuring risk assessments and due diligence are...